Regency Mines (LSE:RGM) dipped 5pc to 0.28p on Monday morning after making several alterations to its funding arrangements, as a way of strengthening its operational focus this year. The company has partially repaid and restructured last year’s $1.6m convertible loan and has also taken on a new £676,000 loan with warrants.
The new £676,000 convertible loan notes and accompanying warrants have been issued to institutional and high net worth investors. The notes can be converted into Regency shares at 0.42p each at any time until 30 May 2020. Each note has a denomination of £1,000, meaning they convert into 238,095 new Regency shares.
Each note holder also receives 119,046 warrants for each note subscribed. These entitle the holder to subscribe for one Regency share at a price of 0.6p at any time until 31 May 2021. All-in-all, up to £1.1m of notes may be issued in one or more tranches.
Elsewhere, Regency announced the partial repayment and restructuring of the $1.6m loan taken out from institutional investors in June last year. The business was lent the funds by Riverfort Global Opportunities and YA II PN for an initial term of six months. Regency could extend this loan for six further months in exchange for an additional $80,000 payment.
In today’s update, Regency said it executed a deed with the lenders last Friday to supplement and amend the terms of the loan.
Notably, this saw the business make a $580,000 repayment. The two lenders will now use $500,000 (£395,000) of this payment to subscribe for 395 of today’s newly issued convertible notes. Regency said it could make an additional $160,000 repayment from the proceeds of any third-party financing. This could include the issue of any further tranche of convertible notes.
Under the terms of the new deed, Regency will now make monthly $50,000 payments of principal and interest between May 2019 and February 2020. As a result of this extension, it must now pay the $80,000 extension fee and $20,000 of a $156,000 restructuring fee. In respect of this, its lenders have subscribed for c.22.5m new Regency shares at 0.35p each. Meanwhile, the balance of the restructuring fee becomes payable when the loan matures in February 2020. It will have an interest rate of 12pc per annum.
Regency’s chairman Andrew Bell said the May 2020 notes and changes to the $1.6m loan note have ‘shifted the main burden of any repayments into 2020’. He added that this was a ‘prerequisite’ for making the most of the numerous opportunities it has identified to boost cash flows and profitability.
The business manages a portfolio of mineral, oil and gas and energy storage projects. These includes a 50pc stake in the Mambare nickel-cobalt laterite deposit in Papua New Guinea and a 47pc position in Mining Equity Trust, which acquires and operates producing metallurgical coal assets in the US. It also owns an 8.9pc stake in Curzon Energy (LSE:CZN) as well as holdings in Whitecar, Allied Energy Services and Red Rock Resources (LSE:RRR), which is also chaired by Bell.
‘This clearer runway through 2019 and into next year gives us more time to unlock and build value, and reduces short-term uncertainty,’ said Bell. ‘Our primary focus is on growing cash flows from our coal operations through 2019 and generating cash remittances back into the parent company. In other parts of our business, we see opportunities for profit also demanding our attention.’
Author: Daniel Flynn
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